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ERG offers alternative to European mobile roaming price cap

Calls for wholesale regulation

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European telecommunications regulators have written to the European Commission trying to block its planned legislation on mobile roaming charges, which have skyrocketed out of control in Europe.

The European Regulators Group (ERG), a body composed of the European Union's telecoms regulators, agree regulation is necessary but want to see it focused just on wholesale charges. In other words, if it can regulate what one operator charges another, then it just assumes that all or most of that benefit will be passed on to the customer. Some chance.

European cellcos are in a fight to raise, or in some cases sustain, ARPU - and given the amount of business travel that goes on around the 25 countries in the European Union, it relies on artificially, and sometimes disguised roaming charges. Sometimes roaming charges are higher than the actual call charges by an order of magnitude.

Also, larger cellcos use their wholesale rates to bully smaller operators and take away some of their call revenue.

The ERG says retail regulation often has unexpected consequences and is inconsistent with the general approach taken to regulation within the EU.

In other words it wants to stop one cellco bullying a smaller cellco, but doesn't care how much relief the eventual customer receives.

The ERG is asking for a brief moratorium, calling for wholesale regulation and a time period for it to work before imposing retail price restrictions.

Specifically, it wants a single European-wide price cap on wholesale roaming charges set at about €0.30 ($0.38), as opposed to the current average level of about €0.75 ($0.96) and to set up and maintain an up-to-date index of retail international roaming charges.

European regulators may be acting as a mediator in this dispute and probably have significant clout in the discussion. We would expect some behind the scenes discussion with the commission before a final change is worked out.

Copyright © 2006, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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